On this episode of Saving the American Dream, we’ll share some of the key areas of financial planning you might not think about and how you could be flirting with disaster.
Out-of-date legal documents
Out-of-date legal documents are better than no legal documents, but it’s important to stay on top of this every few years.
“I would say 80% to 90% of the time when I meet with new potential clients, there’s no legal documents in place at all,” said Michael.
Maybe you have a will, but lack something else that you need, like a durable power of attorney. Too many people are walking around with no documents, or documents that are in desperate need of an update. Don’t let this be you.
Incorrect beneficiary designations
It can be easy to forget to update your beneficiary designations. This could apply to IRAs, life insurance, or any other account or policy that has a designated beneficiary.
Divorces and second marriages might be a reason to change, or maybe the birth of a new child, or maybe a fractured relationship with adult children that makes you not want to have them as your beneficiary any longer.
“So much can change in a decade,” said Michael.
Beneficiary designations override your will, so be sure they’re up to date and accurate.
Tax time bomb
If the overwhelming majority of your investments are in tax-deferred accounts, you could be building up a time bomb for yourself. If you’re going to pay income taxes on every penny of your retirement cash flow, you leave yourself vulnerable to tax rate increases in the future.
“This is kind of a hot topic right now, because we are highly likely to be going into 2022 with a new tax code, and it’s very likely that taxes are going to go up over the next few years,” said Michael.
Listen to the full podcast or use the timestamps below to jump to a specific section.
Navigating the Show
[1:55] – Out-of-date legal documents
[4:06] – Incorrect beneficiary designations
[6:15] – Tax time bomb
[12:50] – 60/40 portfolio
“I would say 80% to 90% of the time when I meet with new potential clients, there’s not legal documents in place at all.”
– Michael Schulte